General Assembly approves gas tax hike

The Maryland General Assembly gave final approval Friday to Gov. Martin O'Malley's proposed gas tax increase, raising costs for motorists while providing an infusion of hundreds of millions of dollars a year for new roads and mass transit projects.

The Senate voted 27-20 to approve the bill, sending it to O'Malley for his expected signature.

The legislation will raise taxes on gasoline in stages over four years — with a roughly 4-cent increase coming July 1.

By mid-2016,unless Congress allows states to tax Internet sales, motorists in Maryland are likely to be paying an estimated 20 cents a gallon more in taxes than the current 23.5-cents rate that has been in effect since 1992.

After the vote, the governor released a statement praising Senate President Thomas V. Mike Miller, House Speaker Michael E. Busch and other lawmakers for their support on the politically sensitive issue.

"With the passage of the Transportation Infrastructure Investment Act today, we will support more than 57,000 jobs, ease traffic congestion, and build a 21st century transportation network," O'Malley said in the statement.

Senate Republicans and other critics saw the issue differently. Minority Leader E.J. Pipkin said the bill would raise gas taxes on motorists 86 percent to continue subsidizing mass transit systems used by 8 percent of the state's residents.

"This is an extreme bill. It is on the edge," said Pipkin, an Eastern Shore Republican. All 12 Senate Republicans, joined by eight Democrats, voted no.

When the phased-in increases are fully implemented, motorists in Maryland will pay $600 million more in gas taxes a year than they do now. The increases will continue beyond then, because the state's per-gallon excise tax will now rise with inflation. Another part of the package imposes a phased-in sales tax on gasoline, which will yield increased revenue when gas prices rise.

Baltimore-area bus, subway and light rail fares will also go up, starting with a 10-cent increase in July 2014. The current fare is $1.60.

The legislation is the result of an agreement reached by O'Malley, Miller and Busch to address the depletion of the state's Transportation Trust Fund. Their action follows the Virginia Legislature's approval last month of an $880 million-a-year transportation revenue package.

Supporters of Maryland's increase said the state needed to act, pointing out that traffic congestion is a consideration when major employers decide whether to locate in Maryland or Northern Virginia.

Without a revenue increase, the Maryland Department of Transportation said it would run out of money for anything except routine maintenance projects.

The measure received final approval after a sharp but mostly one-sided debate during which Republicans raised multiple objections. They complained that the gas tax is a regressive tax that hurts the working poor, that too much of the money will go to mass transit instead of roads and that the increased taxes will hurt businesses and kill jobs.

Pipkin expressed particular scorn for the part of the bill that allows the gas tax to increase automatically with inflation. "We shouldn't be putting taxes on cruise control," he said.

Motorists could be spared about 7 cents of the possible 20-cent increase if Congress acts by December 2015 to allow states to apply sales taxes to such Internet retailers as Amazon.com. In a provision similar to Virginia's new law, the legislation would dedicate part of any such revenue to transportation in place of the gas sales tax. So far, Congress has shown little inclination to pass that bill.

Because of other changes, including a $3.50 increase in the vehicle registration fee and the higher Maryland Transit Administration fares, the total package is expected to yield $734 million a year for transportation when fully phased in.

In addition to passing the gas tax bill, senators voted 45-2 for a proposed constitutional amendment to require a three-fifths vote of each chamber of the General Assembly to divert funds from the trust fund to non-transportation purposes. The so-called "lockbox" amendment goes now to the House of Delegates, where Busch said legislators would consider the idea. Constitutional amendments also require approval of Maryland voters in a general election.

The Senate acted in response to complaints that the legislature had allowed O'Malley and previous governors to "raid" the trust fund in times of budget shortfalls.

After passing the two measures along with a major bill on Baltimore school construction, Miller declared that it had been a "very productive day."

Hours before the House was scheduled to debate a proposed increase in gas taxes supported by Gov. Martin O'Malley, Republicans lawmakers excoriated the plan Wednesday as a $2 billion drain on taxpayers' wallets over the next six years.